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Covid-19 and the Golden Rule of Social Distancing

In: Economic Challenges for Europe After the Pandemic

Author

Listed:
  • Marias H. Gestsson

    (University of Iceland)

  • Gylfi Zoega

    (University of Iceland
    Birkbeck College, University of London)

Abstract

We derive a golden rule of social distancing when new variants of a pandemic continuously enter a country requiring permanent social distancing. The results show that high-income countries should have more social distancing while service economies should have less social distancing. Moreover, vaccination lowers the socially optimal level of social distancing. Using data on infections and death from COVID-19 we find that countries do not follow the golden rule when it comes to income and the importance of the service sector. However, consistent with our model, island economies, which have a lower rate of inflow of new infections, suffer fewer local infections and deaths.

Suggested Citation

  • Marias H. Gestsson & Gylfi Zoega, 2022. "Covid-19 and the Golden Rule of Social Distancing," Springer Proceedings in Business and Economics, in: Luigi Paganetto (ed.), Economic Challenges for Europe After the Pandemic, pages 25-41, Springer.
    • Handle: RePEc:spr:prbchp:978-3-031-10302-5_3
    DOI: 10.1007/978-3-031-10302-5_3
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    More about this item

    Keywords

    Covid-19; Social distancing; Golden rules;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • I1 - Health, Education, and Welfare - - Health

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